US STOCKS-Wall St drops as strong inflation data fuels rate hike bets

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* U.S. consumer prices jump more than expected in April

* Megacap tech stocks lead declines

* Indexes down: Dow 1.18%, S&P 1.48%, Nasdaq 2.25% (Adds quote, details; updates prices)

By Medha Singh and Sruthi Shankar

May 12 (Reuters) - Wall Street's major indexes fell on Wednesday after stronger-than-expected inflation data stoked worries of tighter monetary policy to combat what many investors fear could be a prolonged period of inflation.

The Labor Department's data showed U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints. In the 12 months through April, the CPI shot up 4.2%, from a low base last year.

U.S. money markets moved fully to price in a 25 basis point interest rate hike by December 2022 after the data, while yield on 10-year Treasury notes jumped to a two-week high of 1.690%.

"There is uncertainty over how long inflation is going to exist within the current economic recovery because we can see increases in housing prices, commodities around the world and increase in demand for goods and services," Brian Vendig, president, MJP Wealth Advisors in Westport, Connecticut.

"The uncertainty over the path of rates and inflation is making investors reconsider their portfolios, especially in technology stocks and others that had done really well last year."

Among mega-caps, Facebook Inc, Amazon.com Inc , Apple, Google-parent Alphabet Inc and Microsoft Corp fell between 1.8% and 3.3% as prospects of higher rates dampened demand for the high valuation stocks.